SBI not to allow global M&As affect non-life JV
State Bank of India will take measures to ensure that its proposed non-life joint venture is not adversely affected by international M&As.
By TNN |
MUMBAI: State Bank of India will take measures to ensure that its proposed non-life joint venture is not adversely affected by international M&As. The bank has entered into a memorandum of understanding with Insurance Australia Group (IAG), which is being targeted by another Australian insurer QBE.
Speaking to ET, State Bank of India deputy managing director Deepak Chawla said SBI decided to go ahead with IAG as it was a good fit.
���We are looking at SME, retail and mid-corporate sectors as large corporate business is a different ball game. We found that they had a good fit with our business plans. Moreover, they specialise in non-life and have experience in Asian markets such as Thailand and Malaysia.���
But while IAG suits the business plans of SBI, it is facing a takeover threat back home in Australia. Last month, another Australian insurer QBE made a $7.6-billion takeover offer to IAG. QBE, incidentally, already has a presence in
India in the non-life business along with the Rahejas. However, industry watchers feel that even if an acquisition was to happen, SBI is likely to be the partner of choice for any foreign company. When asked about the bid on IAG, Mr Chawla said: ���All these things happen.
We have not signed the shareholder agreement but we will do our due diligence.���
���Establishing a general insurance joint venture is a key element of SBI���s strategy to pursue emerging, high-growth opportunities to build on our position as the pre-eminent financial services group in India,��� said Mr Chawla.
He added that the pricing of shares was under discussion and likely to be finalised in June when the bank is due to sign a shareholder agreement with IAG. The partners would then draw up a business plan which would determine the extent of the capital required.
The Australian media quoted IAG chief executive Michael Hawker as saying the Indian general insurance sector had grown at a compound annual growth rate of 14% over the last five years, and is predicted to grow by 15-20% per annum over the next five years.
Speaking to ET, State Bank of India deputy managing director Deepak Chawla said SBI decided to go ahead with IAG as it was a good fit.
���We are looking at SME, retail and mid-corporate sectors as large corporate business is a different ball game. We found that they had a good fit with our business plans. Moreover, they specialise in non-life and have experience in Asian markets such as Thailand and Malaysia.���
But while IAG suits the business plans of SBI, it is facing a takeover threat back home in Australia. Last month, another Australian insurer QBE made a $7.6-billion takeover offer to IAG. QBE, incidentally, already has a presence in
India in the non-life business along with the Rahejas. However, industry watchers feel that even if an acquisition was to happen, SBI is likely to be the partner of choice for any foreign company. When asked about the bid on IAG, Mr Chawla said: ���All these things happen.
We have not signed the shareholder agreement but we will do our due diligence.���
ADVERTISEMENT
A general insurance business was the only offering that was missing from the SBI portfolio of financial sector products. ���Establishing a general insurance joint venture is a key element of SBI���s strategy to pursue emerging, high-growth opportunities to build on our position as the pre-eminent financial services group in India,��� said Mr Chawla.
He added that the pricing of shares was under discussion and likely to be finalised in June when the bank is due to sign a shareholder agreement with IAG. The partners would then draw up a business plan which would determine the extent of the capital required.
The Australian media quoted IAG chief executive Michael Hawker as saying the Indian general insurance sector had grown at a compound annual growth rate of 14% over the last five years, and is predicted to grow by 15-20% per annum over the next five years.
ADVERTISEMENT
Media reports also added that IAG had looked at picking up a stake in HDFC General Insurance but was outbid by German insurer Ergo. Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
